On 26 June the long-awaited Corporate Insolvency and Governance Act 2020 came into force and introduced emergency measures to provide protection to directors of companies which continue to trade notwithstanding the threat of insolvency, and to prevent, where possible, companies entering into insolvency due to COVID-19.

On 26 June, the long-awaited Corporate Insolvency and Governance Act 2020 became law providing the UK (but with separate provisions for Northern Ireland) with temporary and permanent changes to insolvency law aimed at helping businesses manage the economic implications of COVID-19 including:

Permanent measures

The UK government introduced the Corporate Insolvency and Governance Bill (CIGB) to Parliament on 20 May 2020. As well as including temporary measures to help support businesses affected by COVID-19, it proposes significant permanent changes to UK insolvency law. These proposed permanent changes include a new company moratorium: a mechanism to give a company in financial difficulty a temporary breathing space against creditor action, during which the directors remain in control, but overseen by a monitor.

On 20 May, Parliament had its first reading of the Bill, a detailed document containing all the expected provisions applying across England, Wales and Scotland, and with separate (but substantially similar) provisions for Northern Ireland.

MPs will next consider all stages of the Bill on 3 June 2020 and it is anticipated that this will be fast-tracked to become law in July.

Over the past few weeks, the UK government, regulators and other bodies have moved to help businesses navigate the unprecedented disruption caused by the COVID-19 pandemic. We start this briefing with a round-up of key changes in the areas of company law and corporate finance regulation.

Filing accounts

It is an unfortunate reality that the current pandemic and associated recession will result in the collapse of many businesses, with sectors including retail, hospitality and travel likely to be particularly hard hit. One report by a leading consultancy estimates that half a million UK companies are at risk.

On 28 March 2020 the UK government announced that emergency measures will be implemented to provide protection to directors of companies which continue to trade notwithstanding the threat of insolvency, and to prevent, where possible, companies entering into insolvency due to COVID-19.

The proposed measures are as follows:

In a last Amerind-tinged gift before Christmas, the High Court has today handed down another judgment on an issue which lies at the intersection between insolvency law and trust law, although this time in the bankruptcy context. It is the latest in a string of unfolding legal developments at this intersection, including the High Court’s decision in June in Amerind and the Full Federal Court’s decision last year in Killarnee.

On 4 December 2019, the UK Supreme Court issued its decision in MacDonald and another as joint liquidators of Grampian MacLennan's Distribution Services Ltd v. Carnbroe Estates Ltd [2019] UKSC 57, a Scottish case involving insolvency and "gratuitous alienations" (sales at undervalue).

Just a note to alert readers that the latest decision of interest in this post-Amerind world dropped today in the Federal Court in Queensland. The liquidators of an insolvent corporate trustee successfully obtained orders appointing them receivers of the assets of two trusts to enforce the rights of exoneration and liens of the former trustee. The application was contested by the new trustee of the property trust, who sought to sell the key asset itself (a hotel – freehold title to the land).